8316 Federal Register / Vol. 72, No. 37 / Monday, February 26, 2007 / Proposed Rules 

1See sections 4, 304 and 309 of the Federal Power 

Act, 16 U.S.C. 797, 825c and 825h (2000); and 

sections 10(a), 16 of the Natural Gas Act, 15 U.S.C. 

717i(a) and 717o (2000); and 49 App. U.S.C. 1–85 

(2000). 

2 18 CFR 141.1, 141.2. 

3 18 CFR. 260.1, 260.2. 

4 18 CFR 357.2, 357.4. 

5Quarterly Financial Reporting and Revisions to 

the Annual Reports, Order No. 646, 69 FR 9030 

(Feb. 26, 2004), FERC Stats. & Regs. ¶ 31,158 (2004), 

as amended by Order No. 646–A, 69 FR 32440 (June 

10, 2004), FERC Stats. & Regs. ¶ 31,163 (2004). See 

18 CFR 141.400, 260.300, and 357.4. 6Order No. 646 at P 16. 

7References to Forms 1 and 2, to the extent 

applicable, also refer to Forms 1–F, 2–A, 3–Q, 6 and 

6–Q. 

8See, e.g., Public Service Commission of New 

York, Pennsylvania Public Utility Commission and 

Pennsylvania Office of Consumer Advocate v. 

National Fuel Gas Supply Corp., 115 FERC ¶ 61,299 

(2006) (National Fuel) (setting for hearing a 

complaint filed by state commissions against 

National Fuel Gas Supply Corp. alleging that the 

company’s rates are unjust and unreasonable, based 

on an analysis of Form 2 data). See also Panhandle 

Complainants v. Southwest Gas Storage Company, 

117 FERC ¶ 61,318 (2006) (Panhandle) (setting for 

hearing a complaint filed by customers of 

Panhandle Eastern Pipeline Company (PEPL), in 

which complainants relied on Form 2–A data for 

support). 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Chapter I 

[Docket No. RM07–9–000] 

Assessment of Information 

Requirements for FERC Financial 

Forms 

Issued February 15, 2007. 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Notice of inquiry. 

SUMMARY: The Federal Energy 

Regulatory Commission (Commission) is 

issuing a notice of inquiry into the need 

for changes or revisions to the 

Commission’s reporting requirements 

for FERC Forms Nos. 1, 1–F, 2, 2–A, 3–

Q, 6 and 6–Q (Financial Forms). This 

notice of inquiry follows informal 

meetings held by Office of Enforcement 

(OE) staff with both filers and users of 

FERC Forms Nos. 1 and 2 to reexamine 

the information in the forms and 

determine whether these forms should 

be modified to improve their usefulness. 

The notice of inquiry invites all 

interested persons to participate in the 

inquiry and to submit answers to several 

specific questions. 

DATES: Comments on this Notice of 

Inquiry are due on March 28, 2007. 

Reply comments are due April 27, 2007. 

ADDRESSES: You may submit comments 

identified by Docket No. RM07–9–000 

by one of the following methods: 

• Agency Web Site: http://ferc.gov. 

Follow the instructions for submitting 

comments via the eFiling link found in 

the Comment Procedures Section of the 

preamble. 

• Mail: Commenters unable to file 

comments electronically must mail or 

hand deliver an original and 14 copies 

of their comments to the Federal Energy 

Regulatory Commission, Secretary of the 

Commission, 888 First Street, NE., 

Washington, DC 20426. Please refer to 

the Comment Procedures Section of the 

preamble for additional information on 

how to file paper comments. 

FOR FURTHER INFORMATION CONTACT: 

Jane Stelck, Office of Enforcement, 

Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 200426, 

jane.stelck@ferc.gov, (202) 502–6648. 

Michelle Veloso, Office of Enforcement, 

Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, 

michelle.veloso@ferc.gov, (202) 502–

8363. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

1. The Federal Energy Regulatory 

Commission (Commission) is initiating 

an inquiry into the need for changes or 

additions to the financial information 

reported in quarterly and annual report 

forms, FERC Form Nos. 1, 1–F, 2, 2–A, 

3–Q, 6 and 6–Q (Financial Forms). 

Specifically, the Commission seeks 

comments on whether the Commission’s 

annual and quarterly financial forms 

provide sufficient information to the 

public to permit an evaluation of the 

filers’ jurisdictional rates, and whether 

these forms should otherwise be 

modified to improve their usefulness. 

II. Background 

2. The Federal Power Act (FPA), the 

Natural Gas Act (NGA) and the 

Interstate Commerce Act (ICA) authorize 

the Commission to prescribe annual or 

other periodic reports to assist the 

Commission in the administration of its 

jurisdictional responsibilities.1 FERC 

Form No. 1, ‘‘Annual Report of Major 

Electric Utilities, Licensees and Others’’

(Form 1), and FERC Form No. 1–F, 

‘‘Annual Report for Nonmajor Public 

Utilities and Licensees’’ (Form 1–F), 

collect annual financial information as 

prescribed in §§ 141.1 and 141.2 of the 

Commission’s regulations.2 FERC Form 

No. 2, ‘‘Annual Report for Major Natural 

Gas Companies’’ (Form 2), and FERC 

Form No. 2–A, ‘‘Annual Report for 

Nonmajor Natural Gas Companies’’

(Form 2–A), collect annual financial 

information from natural gas companies 

subject to the Commission’s 

jurisdiction, as prescribed in §§ 260.1 

and 260.2 of the regulations.3 FERC 

Form No. 6, ‘‘Annual Report of Oil 

Pipeline Companies’’ (Form 6), collects 

annual financial information from oil 

pipeline companies subject to the 

Commission’s jurisdiction, as prescribed 

in §§ 357.2 and 357.4 of the 

regulations.4 In 2004, the Commission’s 

regulations were revised to require the 

filing entities to submit quarterly 

financial reports to supplement the 

annual filings: FERC Form No. 3–Q by 

electric utilities, licensees and natural 

gas companies; and FERC Form No. 6–

Q by oil pipeline companies.5

3. The Financial Forms provide 

information that is essential to the 

Commission’s oversight authority, 

namely, financial data covering a 

company’s past performance. The 

financial statements are prepared in 

accordance with the Commission’s 

Uniform Systems of Accounts and 

related regulations and provide data that 

enables the Commission to develop and 

monitor cost-based rates, analyze costs 

of different services and classes of 

assets, and compare costs across lines of 

business. In addition, the Financial 

Forms are relied upon by electric utility, 

interstate natural gas pipeline and oil 

pipeline customers, state commissions, 

and trade associations to develop and 

monitor rates. When the Commission 

revised its rules to require quarterly 

financial reporting, it concluded, based 

on comments received, that ‘‘the 

financial information filed with the 

Commission represents, in most cases, 

the only source of financial data 

presented in a format and detail suitable 

for the Commission to exercise its duties 

and responsibilities under the Federal 

Power, Natural Gas, and Interstate 

Commerce Acts.’’ 6

4. In the spring of 2006, the Office of 

Enforcement (OE) assumed 

responsibility for all financial forms 

filed with the Commission, which 

routinely reviews and updates the 

forms’ requirements. Accordingly, in 

September and October of 2006, OE staff 

met informally with both filers and 

users of Forms 1 and 2 to reexamine the 

breadth of data collected by the forms 

and to determine the need for 

clarifications, corrections, deletions or 

additional information.7 In particular 

with respect to Form 2, the meetings 

were also prompted because pleadings 

filed recently by certain market 

participants had questioned the 

adequacy of the type and amount of data 

reported in the forms for purposes of 

challenging rates on file for natural gas 

companies.8


hsrobinson on PROD1PC76 with PROPOSALS
Federal Register / Vol. 72, No. 37 / Monday, February 26, 2007 / Proposed Rules 8317 

9The staff outreach did not extend to Form 6 or 

6–Q. The Commission believes, however, that 

extension of this inquiry to the oil pipeline 

financial forms makes sense as many of the 

concerns raised with respect to the other forms 

could apply to the oil pipeline forms as well. 

10Promoting Wholesale Competition Through 

Open Access Non-Discriminatory Transmission 

Services by Public Utilities; Recovery of Stranded 

Costs by Public Utilities and Transmitting Utilities, 

Order No. 888, 61 FR 21540 (May 10, 1996), FERC 

Stats. & Regs. ¶ 31,036 (1996), order on reh’g, Order 

No. 888–A, 62 FR 12274 (Mar. 14, 1997), FERC 

Stats. & Regs. ¶ 31,048 (1997), order on reh’g, Order 

No. 888–B, 81 FERC ¶ 61,248 (1997), order on reh’g, 

Order No. 888–C, 82 FERC ¶ 61,046 (1998), aff’d 

in relevant part sub nom. Transmission Access 

Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir. 

2000) (TAPS v. FERC), aff’d sub nom. New York v. 

FERC, 535 U.S. 1 (2002). 

11See supra note 8. 

12The Industry Coalition comprised the following 

entities: Natural Gas Supply Association, American 

Public Gas Association, Independent Petroleum 

Association of America, and The Process Gas 

Consumers Group. 

13Concurrently with the issuance of this Notice 

of Inquiry, the Commission is issuing a show cause 

order to financial forms filers who have been 

delinquent in making their filings. 

5. During this two-month outreach 

period, OE staff met with 

representatives of natural gas and 

electric utility companies, state 

commissions, trade associations, 

financial entities, energy data 

publishers, federal agencies, and other 

Commission staff. In addition to 

attending the informal meetings, 

participants were invited to submit 

written comments and 

recommendations. At each session, staff 

sought the participants’ views on 

several issues, including: how Forms 1 

and 2 are used; which information is 

most helpful; whether and what 

additional information might be sought; 

and how burdensome to filers might be 

changes made or requirements added to 

either Form 1 or 2.9

III. Comments on Form 1 

6. Representatives of public utilities 

who file Form 1 advocated streamlining 

the form, i.e., limiting the information 

collected to only what is necessary for 

the Commission to perform its 

regulatory function and avoiding the 

collection of unnecessary additional 

information. Many Form 1 filers 

expressed concern that these extensive 

reporting requirements put them at a 

competitive disadvantage because they 

apply only to major public utilities and 

hydropower licensees, and not to state 

and municipal public utilities, rural 

cooperatives, independent power 

producers, exempt wholesale generators 

and power marketers. 

7. Users of Form 1 data emphasized 

its importance in monitoring cost-based 

rates to ensure that rates are just and 

reasonable, and in determining the 

potential need for a section 206 

complaint. More generally, users 

complained that the Form 1 filings are 

often incomplete or inconsistent and 

there is a need for greater quality control 

and follow-up by Commission staff. 

Several users focused on the need for 

greater clarity in the Form 1 instructions 

and a need for upgrades to the software 

to provide for, among other things, more 

standardization of data queries. 

8. Specific suggestions for additional 

information items to be collected in 

Form 1 submitted by the American 

Public Power Association include the 

following: (1) additional cost data 

needed to complete formula rate 

calculations, e.g., a summary schedule 

of information provided on transmission 

line statistics for lines 132 kV or greater; 

(2) the standard rate divisor as specified 

in Order No. 888; 10 (3) expansion of 

existing reporting of individual line and 

substation facilities to identify which 

facilities have been placed under 

operation or control of another entity; 

and, (4) reporting revenue distributions 

from regional transmission 

organizations (RTOs) or independent 

system operators (ISOs) with a 

breakdown of costs and revenues. 

IV. Comments on Form 2 

9. Representatives of the interstate 

natural gas pipeline companies, filers of 

Form 2, complained that the filing 

requirements, including the filing of 

quarterly information, are burdensome 

and collect unnecessary data. These 

filers also expressed their opinion that 

Form 2 is an accounting document that 

does not include projections and, 

therefore, should not be used as a 

substitute for a cost and revenue study 

or be used to gauge earnings. 

10. The users of Form 2 called for 

more, not less data, and identified 

specific areas and accounts they found 

lacking in detail. According to these 

Form 2 users, the lack of detail affects 

the reliability of an accurate assessment 

of pipeline rates. Users of the data 

emphasized the significance of the 

information collected in Form 2 as the 

primary source for evaluating cost-based 

rates. They added that since interstate 

natural gas pipeline companies are no 

longer required to file a periodic 

restatement of rates, the importance of 

the information in Form 2 is particularly 

significant and constitutes the only 

resource available to shippers seeking 

pipeline rate changes by filing a 

complaint.11

11. Specific changes or additional 

details sought by the users of Form 2 

include: (1) A breakdown of operating 

revenues; (2) unbundling of certain 

accounts; (3) additional detail on cost of 

service items, billing determinants, and 

maximum rate contracts; (4) detail on 

pensions and Post Retirement Benefits 

Other Than Pension (OPEBs); (5) more 

detail on employee expenses, employee 

benefits and executive compensation; 

and (6) more affiliate transaction 

schedules. Other data and changes 

requested include: (1) Separation of 

cost-of-service components from noncost-of-service components; (2) 

requiring a filer to identify items that it 

considers rate-base components for 

ratemaking purposes; (3) information on 

construction costs and capitalized costs; 

and (4) additional information on 

deferred taxes and capital structure. 

12. The Industry Coalition 12

(Coalition) submitted written comments 

suggesting specific changes to Form 2, 

information they identified as necessary 

to perform an evaluation of pipeline 

rates. The Coalition’s specific 

suggestions include the following: (1) 

Identify which components of deferred 

taxes are included in rate base for costof-service purposes; (2) provide 

additional information on the entity 

whose capital structure is reported on 

page 218a of the form; (3) provide detail 

on gas purchases and sales; (4) provide 

detail on miscellaneous gas revenues; 

(5) provide a calculation of the 

pipeline’s effective overall state income 

tax rate; (6) provide detail for 

miscellaneous assets; (7) provide detail 

concerning the total parent company 

overhead costs and the amount assigned 

or allocated to the pipeline; (8) provide 

aggregate information on volumes and 

revenues associated with discounted 

services and negotiated rate services; (9) 

identify costs and revenues associated 

with at-risk facilities; and (10) provide 

a calculation of the pipeline’s earned 

annual return on equity. 

13. In addition, many participants 

commented on the need to limit delays 

in filing, and the incompleteness of 

some information that is filed. The 

Commission shares the concern 

regarding timely filings. The 

Commission expects that all Financial 

Forms will be filed in a timely manner 

and will provide all of the requested 

information.13

14. The comments and information 

received as a result of the outreach 

meetings reinforce the significance of 

this data to the Commission, and to the 

public who depend almost solely on the 

data reported when they elect to file a 

complaint under section 5 of the NGA 

or section 206 of the FPA. The forms 

represent more than simply accounting 

documents; the information provided is 

essential to the public’s right to 


hsrobinson on PROD1PC76 with PROPOSALS
8318 Federal Register / Vol. 72, No. 37 / Monday, February 26, 2007 / Proposed Rules 

examine, monitor, and assess utility and 

pipeline rates to ensure that they do not 

pay excessive or unduly discriminatory 

rates. 

15. In light of the comments received, 

both orally and written, during OE’s 

review of Forms 1 and 2, and in light 

of the complaints set for hearing in 

National Fuel and Panhandle and the 

importance of the questions they raise, 

the Commission believes it is 

appropriate to solicit comments on 

these matters. Although the informal 

meetings held as a result of OE’s 

outreach efforts focused on Forms 1 and 

2, this Notice of Inquiry (NOI) solicits 

comments on the need for changes to 

any and all of the Financial Forms filed 

with the Commission, i.e., Form 6 and 

quarterly submissions, Forms 3-Q and 6- 

Q. The Commission is aware that not all 

participants in the informal review had 

an opportunity to submit written 

comments or to respond to comments 

submitted by other parties. This NOI 

gives those entities, and all other 

interested persons, the opportunity to 

comment formally with the Commission 

on any of the issues raised herein. The 

list is not exhaustive. Those responding 

to this NOI should feel free to raise any 

other questions or to make any 

comments which will aid the 

Commission in assessing its Financial 

Forms. After receipt of comments in 

response to this NOI, the Commission 

will determine whether it is appropriate 

to propose changes to the financial 

forms in the context of a formal 

rulemaking. 

V. Questions 

16. The Commission asks that 

interested persons respond to the 

following general questions. 

(1) Do the annual and quarterly 

Financial Forms provide sufficient data 

for the public to permit an evaluation of 

the filers’ jurisdictional rates? 

(2) If not, what additional data is 

needed to conduct such an evaluation? 

Please specify the form (or forms) to 

which your suggestions pertain. 

(3) Do the financial reports provide 

sufficient data to the public to 

determine revenues attributable to the 

sale of excess fuel retention? If not, what 

additional data is needed to conduct 

such an evaluation? 

(4) Is the information included in the 

financial reports sufficient to audit 

formulaic rates? 

(5) Should the Commission require 

reporting of information on demand 

response initiatives (interruptible, load 

control, etc.), including demand and 

peak demand impacts, associated costs 

and savings, and the number of 

advanced meters installed? 

(6) Please explain how this additional 

data will be useful to users of the 

Financial Forms. 

(7) How burdensome would any 

requirement for additional information 

be to filers of Financial Forms? 

(8) Are there specific reporting 

requirements that are no longer 

necessary or unduly burdensome that 

should be deleted? 

(9) What technical revisions, if any, 

need to be made to the Financial Forms? 

For example, identify any suggested 

changes in instructions, desirable 

software upgrades, and whether there 

are errors embedded in the forms which 

need to be corrected. 

(10) Should the Commission require 

electric utilities, licensees and interstate 

natural gas and oil pipeline companies 

to provide notification when their total 

sales or transactions fall below the 

minimum thresholds established in the 

Commission’s regulations such that they 

are no longer subject to these filing 

requirements? 

(11) Should the Commission require a 

showing of good cause before granting 

an extension of time in which to file the 

required forms? 

(12) Are these concerns of sufficient 

importance to warrant a rulemaking 

and, if so, what rules should the 

Commission promulgate? Commenters 

are encouraged to be as specific as 

possible. 

VI. Comment Procedures 

16. The Commission invites interested 

persons to submit comments on these 

matters and any related matters or 

alternative proposals that commenters 

may wish to discuss. Comments are due 

March 28, 2007 and reply comments are 

due April 27, 2007. Comments and 

reply comments must refer to Docket 

No. RM07–9–000 and must include the 

commenter’s name, the organization he 

or she represents, if applicable, and his 

or her address. 

17. Comments may be filed 

electronically via the eFiling link on the 

Commission’s Web site at http:// 

www.ferc.gov. The Commission accepts 

most standard word processing formats 

and commenters may attach additional 

files with supporting information in 

certain other file formats. Commenters 

filing electronically do not need to make 

a paper filing. 

18. Commenters that are not able to 

file comments electronically must send 

an original and 14 copies of their 

comments to: The Federal Energy 

Regulatory Commission, Secretary of the 

Commission, 888 First Street, NE., 

Washington, DC 20426. 

19. All comments will be placed in 

the Commission’s public files and may 

be viewed, printed, or downloaded 

remotely as described in the Document 

Availability section below. Commenters 

on this NOPR are not required to serve 

copies of their comments on other 

commenters. 

VII. Document Availability 

20. In addition to publishing the full 

text of this document in the Federal 

Register, the Commission provides all 

interested persons an opportunity to 

view and/or print the contents of this 

document via the Internet through 

FERC’s Home Page (http:// 

www.ferc.gov.) and in FERC’s Public 

Reference Room during normal business 

hours (8:30 a.m. to 5 p.m. Eastern time) 

at 888 First Street, NE., Room 2A, 

Washington, DC 20426. 

21. From the Commission’s Home 

Page on the Internet, this information is 

available in its eLibrary. The full text of 

this document is available in the 

eLibrary both in PDF and Microsoft 

Word format for viewing, printing, and/ 

or downloading. To access this 

document in eLibrary, type the docket 

number of this document, excluding the 

last three digits, in the docket number 

field. 

22. User assistance is available for 

eLibrary and FERC’s Web site during 

normal business hours from our Help 

line at (202) 502–8222 or the Public 

Reference Room at 

public.reference@ferc.gov. 

By direction of the Commission. 

Magalie R. Salas, 

Secretary. 

[FR Doc. E7–3233 Filed 2–23–07; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 38 

[Docket No. RM05–5–003] 

Standards for Business Practices and 

Communication Protocols for Public 

Utilities 

Issued February 20, 2007. 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Federal Energy 

Regulatory Commission (Commission) 

proposes to incorporate by reference in 

its regulations revisions to the 

Coordinate Interchange business 

practice standards (WEQ–004) adopted 

by the Wholesale Electric Quadrant 


hsrobinson on PROD1PC76 with PROPOSALS